Filene Report Reveals How to Predict Member’s Choice of Auto Lender

When it comes to which lender a member will choose to finance their car loan, credit unions should probably not count so much on interest rates but more on how easy and quickly they can respond back to that potential borrower.

Those are some of the findings from a new report from the Filene Research Institute, Predicting Members' Choice of Auto Lender: Borrowing from Credit Unions or Elsewhere?

“Even with the decreasing auto loan interest rates and increasing credit union market share that began in the late 1980s, 24% of members surveyed chose the competition as their auto lenders,” reads the report authored by Luis G. Dopico.

Based on data collected from a 100-question survey of thousands of members from seven credit unions, the research revealed that credit unions’ relationship strengths play a surprisingly large role in auto loan selection, while their historical pricing strength seems to be less important.

Filene found that the best predictors of members’ choice of auto lender included more intangible aspects of the lender such as the borrower relationship in members’ past auto loans. For instance, members who placed more importance on customer service were far more likely (by 41%) to choose a credit union for their auto loan.

There were similar increases in credit union share for ease of contacting the lender (40%) and lender responsiveness (38%).

Other factors that were surprisingly not useful predictors of members’ choice of auto lender include measures of members’ satisfaction with their specific credit union, commitment to credit unions in general, relationship with other financial institutions, and preferred means of communication from their credit union.

Respondents undoubtedly preferred more attractive loan terms, according to the data. However, questions about more quantifiable loan terms such as low interest rates, flexible repayment structures and down payment requirements were not nearly as useful as predictors of members’ choice of auto lender.

While the research did not find a clear correlation between preferred communication channels and choosing a credit union for an auto loan, it did reveal a large and consistent preference across members for electronic information.

The credit union website is the most preferred communication channel, followed by e‑mail and then by credit union employees. The least preferred are branch brochures and signage and social media.